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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended April 30, 2022.
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from ____ to ____.
COMMISSION FILE NUMBER 001-09235

| | | | | | | | | | | | | | | | | | | | |
THOR INDUSTRIES, INC. |
(Exact name of registrant as specified in its charter) |
| | | | | | |
Delaware | | | 93-0768752 |
(State or other jurisdiction of | | (I.R.S. Employer |
incorporation or organization) | | Identification No.) |
| | | | |
601 E. Beardsley Ave., Elkhart, IN | | 46514-3305 |
(Address of principal executive offices) | | (Zip Code) |
| | | |
| | (574) 970-7460 | | |
| (Registrant's telephone number, including area code) | |
| | | | |
| None | |
(Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Name of each exchange |
Title of each class | | Trading Symbol(s) | | on which registered |
Common stock (Par value $.10 Per Share) | | THO | | New York Stock Exchange |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☑ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑
As of May 31, 2022, 54,531,138 shares of the registrant’s common stock, par value $0.10 per share, were outstanding.
PART I – FINANCIAL INFORMATION (Unless otherwise indicated, amounts in thousands except share and per share data.)
ITEM 1. FINANCIAL STATEMENTS
THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| | | | | | | | | | | |
| April 30, 2022 | | July 31, 2021 |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 329,297 | | | $ | 445,852 | |
Restricted cash | 2,682 | | | 2,854 | |
Accounts receivable, trade, net | 1,166,316 | | | 796,489 | |
| | | |
Accounts receivable, other, net | 80,482 | | | 153,443 | |
Inventories, net | 1,734,079 | | | 1,369,384 | |
Prepaid income taxes, expenses and other | 45,658 | | | 35,501 | |
| | | |
Total current assets | 3,358,514 | | | 2,803,523 | |
Property, plant and equipment, net | 1,233,907 | | | 1,185,131 | |
Other assets: | | | |
Goodwill | 1,834,873 | | | 1,563,255 | |
Amortizable intangible assets, net | 1,171,149 | | | 937,171 | |
Deferred income tax assets, net | 1,159 | | | 41,216 | |
| | | |
Other | 135,898 | | | 123,792 | |
Total other assets | 3,143,079 | | | 2,665,434 | |
TOTAL ASSETS | $ | 7,735,500 | | | $ | 6,654,088 | |
| | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
Current liabilities: | | | |
Accounts payable | $ | 1,029,300 | | | $ | 915,045 | |
Current portion of long-term debt | 10,991 | | | 12,411 | |
Short-term financial obligations | 18,189 | | | 25,720 | |
Accrued liabilities: | | | |
Compensation and related items | 280,662 | | | 249,761 | |
Product warranties | 309,377 | | | 267,620 | |
Income and other taxes | 66,808 | | | 85,789 | |
Promotions and rebates | 123,930 | | | 128,869 | |
Product, property and related liabilities | 46,971 | | | 38,590 | |
| | | |
| | | |
Other | 85,429 | | | 70,980 | |
| | | |
Total current liabilities | 1,971,657 | | | 1,794,785 | |
Long-term debt | 1,983,596 | | | 1,594,821 | |
Deferred income tax liabilities, net | 141,520 | | | 113,598 | |
Unrecognized tax benefits | 25,603 | | | 15,844 | |
Other liabilities | 171,941 | | | 186,934 | |
Total long-term liabilities | 2,322,660 | | | 1,911,197 | |
Contingent liabilities and commitments | | | |
Stockholders’ equity: | | | |
Preferred stock – authorized 1,000,000 shares; none outstanding | — | | | — | |
Common stock – par value of $.10 per share; authorized 250,000,000 shares; issued 66,059,403 and 65,651,570 shares, respectively | 6,606 | | | 6,565 | |
Additional paid-in capital | 490,686 | | | 460,482 | |
Retained earnings | 3,555,766 | | | 2,770,401 | |
Accumulated other comprehensive income (loss), net of tax | (142,609) | | | 44,621 | |
Less treasury shares of 11,528,265 and 10,285,329, respectively, at cost | (476,558) | | | (360,226) | |
Stockholders’ equity attributable to THOR Industries, Inc. | 3,433,891 | | | 2,921,843 | |
Non-controlling interests | 7,292 | | | 26,263 | |
Total stockholders’ equity | 3,441,183 | | | 2,948,106 | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 7,735,500 | | | $ | 6,654,088 | |
See Notes to the Condensed Consolidated Financial Statements.
THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended April 30, | | Nine Months Ended April 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
Net sales | $ | 4,657,517 | | | $ | 3,459,264 | | | $ | 12,490,759 | | | $ | 8,724,412 | |
Cost of products sold | 3,850,072 | | | 2,953,984 | | | 10,352,616 | | | 7,425,403 | |
Gross profit | 807,445 | | | 505,280 | | | 2,138,143 | | | 1,299,009 | |
Selling, general and administrative expenses | 281,676 | | | 231,834 | | | 845,009 | | | 619,786 | |
Amortization of intangible assets | 40,725 | | | 30,480 | | | 117,288 | | | 87,110 | |
| | | | | | | |
| | | | | | | |
Interest income | 570 | | | 142 | | | 854 | | | 662 | |
Interest expense | 22,859 | | | 26,808 | | | 68,370 | | | 75,248 | |
Other income (expense), net | (348) | | | 16,379 | | | 13,172 | | | 25,430 | |
Income before income taxes | 462,407 | | | 232,679 | | | 1,121,502 | | | 542,957 | |
Income tax provision | 116,389 | | | 49,960 | | | 265,046 | | | 113,409 | |
Net income | 346,018 | | | 182,719 | | | 856,456 | | | 429,548 | |
Less: Net (loss) attributable to non-controlling interests | (2,033) | | | (592) | | | (405) | | | (44) | |
Net income attributable to THOR Industries, Inc. | $ | 348,051 | | | $ | 183,311 | | | $ | 856,861 | | | $ | 429,592 | |
| | | | | | | |
Weighted-average common shares outstanding: | | | | | | | |
Basic | 54,906,356 | | | 55,366,241 | | | 55,278,320 | | | 55,323,080 | |
Diluted | 55,068,783 | | | 55,723,378 | | | 55,507,023 | | | 55,615,107 | |
| | | | | | | |
Earnings per common share: | | | | | | | |
Basic | $ | 6.34 | | | $ | 3.31 | | | $ | 15.50 | | | $ | 7.77 | |
Diluted | $ | 6.32 | | | $ | 3.29 | | | $ | 15.44 | | | $ | 7.72 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Comprehensive income: | | | | | | | |
Net income | $ | 346,018 | | | $ | 182,719 | | | $ | 856,456 | | | $ | 429,548 | |
Other comprehensive income (loss), net of tax | | | | | | | |
Foreign currency translation adjustment | (90,910) | | | (7,449) | | | (196,051) | | | 33,691 | |
Unrealized gain on derivatives, net of tax | 3,620 | | | 2,929 | | | 8,104 | | | 8,612 | |
Other (loss), net of tax | — | | | — | | | (372) | | | — | |
Total other comprehensive income (loss), net of tax | (87,290) | | | (4,520) | | | (188,319) | | | 42,303 | |
Total Comprehensive income | 258,728 | | | 178,199 | | | 668,137 | | | 471,851 | |
Less: Comprehensive income (loss) attributable to non-controlling interests | (2,417) | | | (647) | | | (1,494) | | | 41 | |
Comprehensive income attributable to THOR Industries, Inc. | $ | 261,145 | | | $ | 178,846 | | | $ | 669,631 | | | $ | 471,810 | |
See Notes to the Condensed Consolidated Financial Statements.
THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| | | | | | | | | | | |
| Nine Months Ended April 30, |
| 2022 | | 2021 |
Cash flows from operating activities: | | | |
Net income | $ | 856,456 | | | $ | 429,548 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Depreciation | 95,206 | | | 82,533 | |
Amortization of intangible assets | 117,288 | | | 87,110 | |
Amortization of debt issuance costs | 8,457 | | | 12,825 | |
| | | |
| | | |
Deferred income tax benefit | (18,830) | | | (4,499) | |
(Gain) loss on disposition of property, plant and equipment | 833 | | | (296) | |
Stock-based compensation expense | 22,736 | | | 21,424 | |
Changes in assets and liabilities: | | | |
Accounts receivable | (256,180) | | | (175,635) | |
Inventories, net | (338,852) | | | (632,506) | |
Prepaid income taxes, expenses and other | (4,578) | | | (28,280) | |
Accounts payable | 78,897 | | | 341,535 | |
| | | |
Accrued liabilities | 92,693 | | | 32,581 | |
Long-term liabilities and other | (16,577) | | | 8,733 | |
Net cash provided by operating activities | 637,549 | | | 175,073 | |
Cash flows from investing activities: | | | |
Purchases of property, plant and equipment | (170,702) | | | (81,162) | |
Proceeds from dispositions of property, plant and equipment | 823 | | | 1,742 | |
Business acquisitions, net of cash acquired | (781,967) | | | (310,938) | |
| | | |
| | | |
Other | (20,000) | | | 9,330 | |
Net cash used in investing activities | (971,846) | | | (381,028) | |
Cash flows from financing activities: | | | |
| | | |
Borrowings on revolving asset-based credit facilities | 660,088 | | | 225,676 | |
Payments on revolving asset-based credit facilities | (559,035) | | | (114,836) | |
Proceeds from issuance of senior unsecured notes | 500,000 | | | — | |
Payments on term-loan credit facilities | (124,565) | | | (59,700) | |
| | | |
Payments on other debt | (7,842) | | | (9,711) | |
Payments of debt issuance costs | (8,445) | | | — | |
Regular cash dividends paid | (71,496) | | | (68,100) | |
Payments on finance lease obligations | (801) | | | (492) | |
Purchases of treasury shares | (98,321) | | | — | |
Payments related to vesting of stock-based awards | (18,011) | | | (8,317) | |
Short-term financial obligations and other, net | (21,120) | | | (7,323) | |
Net cash provided by (used in) financing activities | 250,452 | | | (42,803) | |
Effect of exchange rate changes on cash and cash equivalents and restricted cash | (32,882) | | | 4,857 | |
Net decrease in cash and cash equivalents and restricted cash | (116,727) | | | (243,901) | |
Cash and cash equivalents and restricted cash, beginning of period | 448,706 | | | 541,363 | |
Cash and cash equivalents and restricted cash, end of period | 331,979 | | | 297,462 | |
Less: restricted cash | 2,682 | | | 2,900 | |
Cash and cash equivalents, end of period | $ | 329,297 | | | $ | 294,562 | |
Supplemental cash flow information: | | | |
Income taxes paid | $ | 270,063 | | | $ | 172,397 | |
Interest paid | $ | 59,454 | | | $ | 62,048 | |
Non-cash investing and financing transactions: | | | |
Capital expenditures in accounts payable | $ | 7,914 | | | $ | 3,497 | |
| | | |
| | | |
| | | |
See Notes to the Condensed Consolidated Financial Statements.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
THOR INDUSTRIES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY |
FOR THE THREE AND NINE MONTHS ENDED APRIL 30, 2022 AND 2021 (UNAUDITED) |
| | | | | | | | | | |
| Three Months Ended April 30, 2022 |
| | | | | Accumulated | | | Stockholders’ | | |
| | | Additional | | Other | | | Equity | Non- | Total |
| Common Stock | Paid-In | Retained | Comprehensive | Treasury Stock | Attributable | controlling | Stockholders’ |
| Shares | Amount | Capital | Earnings | Income (Loss) | Shares | Amount | to THOR | Interests | Equity |
Balance at February 1, 2022 | 66,059,403 | | $ | 6,606 | | $ | 479,946 | | $ | 3,231,378 | | $ | (55,703) | | 11,029,159 | | $ | (436,568) | | $ | 3,225,659 | | $ | 27,925 | | $ | 3,253,584 | |
Net income (loss) | — | | — | | — | | 348,051 | | — | | — | | — | | 348,051 | | (2,033) | | 346,018 | |
Purchases of treasury shares | — | | — | | — | | — | | — | | 499,106 | | (39,990) | | (39,990) | | — | | (39,990) | |
Restricted stock unit activity | — | | — | | (526) | | — | | — | | — | | — | | (526) | | — | | (526) | |
Dividends $0.43 per common share | — | | — | | — | | (23,663) | | — | | — | | — | | (23,663) | | — | | (23,663) | |
Stock-based compensation expense | — | | — | | 9,750 | | — | | — | | — | | — | | 9,750 | | — | | 9,750 | |
Other comprehensive income (loss) | — | | — | | — | | — | | (86,906) | | — | | — | | (86,906) | | (384) | | (87,290) | |
Dividend paid to non-controlling interest | — | | — | | — | | — | | — | | — | | — | | — | | (555) | | (555) | |
Acquisitions | — | | — | | 1,516 | | — | | — | | — | | — | | 1,516 | | (17,661) | | (16,145) | |
Balance at April 30, 2022 | 66,059,403 | | $ | 6,606 | | $ | 490,686 | | $ | 3,555,766 | | $ | (142,609) | | 11,528,265 | | $ | (476,558) | | $ | 3,433,891 | | $ | 7,292 | | $ | 3,441,183 | |
| | | | | | | | | | |
| Nine Months Ended April 30, 2022 |
| | | | | Accumulated | | | Stockholders’ | | |
| | | Additional | | Other | | | Equity | Non- | Total |
| Common Stock | Paid-In | Retained | Comprehensive | Treasury Stock | Attributable | controlling | Stockholders’ |
| Shares | Amount | Capital | Earnings | Income (Loss) | Shares | Amount | to THOR | Interests | Equity |
Balance at August 1, 2021 | 65,651,570 | | $ | 6,565 | | $ | 460,482 | | $ | 2,770,401 | | $ | 44,621 | | 10,285,329 | | $ | (360,226) | | $ | 2,921,843 | | $ | 26,263 | | $ | 2,948,106 | |
Net income (loss) | — | | — | | — | | 856,861 | | — | | — | | — | | 856,861 | | (405) | | 856,456 | |
Purchases of treasury shares | — | | — | | — | | — | | — | | 1,090,067 | | (98,321) | | (98,321) | | — | | (98,321) | |
Restricted stock unit activity | 407,833 | | 41 | | 5,952 | | — | | — | | 152,869 | | (18,011) | | (12,018) | | — | | (12,018) | |
Dividends $1.29 per common share | — | | — | | — | | (71,496) | | — | | — | | — | | (71,496) | | — | | (71,496) | |
Stock-based compensation expense | — | | — | | 22,736 | | — | | — | | — | | — | | 22,736 | | — | | 22,736 | |
Other comprehensive income (loss) | — | | — | | — | | — | | (187,230) | | — | | — | | (187,230) | | (1,089) | | (188,319) | |
Dividend paid to non-controlling interest | — | | — | | — | | — | | — | | — | | — | | — | | (555) | | (555) | |
Acquisitions | — | | — | | 1,516 | | — | | — | | — | | — | | 1,516 | | (16,922) | | (15,406) | |
Balance at April 30, 2022 | 66,059,403 | | $ | 6,606 | | $ | 490,686 | | $ | 3,555,766 | | $ | (142,609) | | 11,528,265 | | $ | (476,558) | | $ | 3,433,891 | | $ | 7,292 | | $ | 3,441,183 | |
| | | | | | | | | | |
See Notes to the Condensed Consolidated Financial Statements.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
THOR INDUSTRIES, INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY |
FOR THE THREE AND NINE MONTHS ENDED APRIL 30, 2022 AND 2021 (UNAUDITED) |
| | | | | | | | | | |
| Three Months Ended April 30, 2021 |
| | | | | Accumulated | | | Stockholders’ | | |
| | | Additional | | Other | | | Equity | Non- | Total |
| Common Stock | Paid-In | Retained | Comprehensive | Treasury Stock | Attributable | controlling | Stockholders’ |
| Shares | Amount | Capital | Earnings | Income (Loss) | Shares | Amount | to THOR | Interests | Equity |
Balance at February 1, 2021 | 65,651,570 | | $ | 6,565 | | $ | 448,010 | | $ | 2,402,211 | | $ | 73,676 | | 10,285,329 | | $ | (360,226) | | $ | 2,570,236 | | $ | 26,475 | | $ | 2,596,711 | |
Net income (loss) | — | | — | | — | | 183,311 | | — | | — | | — | | 183,311 | | (592) | | 182,719 | |
Restricted stock unit activity | — | | — | | (2,049) | | — | | — | | — | | — | | (2,049) | | — | | (2,049) | |
Dividends $0.41 per common share | — | | — | | — | | (22,700) | | — | | — | | — | | (22,700) | | — | | (22,700) | |
Stock-based compensation expense | — | | — | | 8,366 | | — | | — | | — | | — | | 8,366 | | — | | 8,366 | |
Other comprehensive income (loss) | — | | — | | — | | — | | (4,465) | | — | | — | | (4,465) | | (55) | | (4,520) | |
| | | | | | | | | | |
Dividend paid to non-controlling interests | — | | — | | — | | — | | — | | — | | — | | — | | (605) | | (605) | |
Balance at April 30, 2021 | 65,651,570 | | $ | 6,565 | | $ | 454,327 | | $ | 2,562,822 | | $ | 69,211 | | 10,285,329 | | $ | (360,226) | | $ | 2,732,699 | | $ | 25,223 | | $ | 2,757,922 | |
| | | | | | | | | | |
| Nine Months Ended April 30, 2021 |
| | | | | Accumulated | | | Stockholders’ | | |
| | | Additional | | Other | | | Equity | Non- | Total |
| Common Stock | Paid-In | Retained | Comprehensive | Treasury Stock | Attributable | controlling | Stockholders’ |
| Shares | Amount | Capital | Earnings | Income (Loss) | Shares | Amount | to THOR | Interests | Equity |
Balance at August 1, 2020 | 65,396,531 | | $ | 6,540 | | $ | 436,828 | | $ | 2,201,330 | | $ | 26,993 | | 10,197,775 | | $ | (351,909) | | $ | 2,319,782 | | $ | 25,787 | | $ | 2,345,569 | |
Net income (loss) | — | | — | | — | | 429,592 | | — | | — | | — | | 429,592 | | (44) | | 429,548 | |
Restricted stock unit activity | 255,039 | | 25 | | (3,925) | | — | | — | | 87,554 | | (8,317) | | (12,217) | | — | | (12,217) | |
Dividends $1.23 per common share | — | | — | | — | | (68,100) | | — | | — | | — | | (68,100) | | — | | (68,100) | |
Stock-based compensation expense | — | | — | | 21,424 | | — | | — | | — | | — | | 21,424 | | — | | 21,424 | |
Other comprehensive income (loss) | — | | — | | — | | — | | 42,218 | | — | | — | | 42,218 | | 85 | | 42,303 | |
| | | | | | | | | | |
Dividend paid to non-controlling interests | — | | — | | — | | — | | — | | — | | — | | — | | (605) | | (605) | |
Balance at April 30, 2021 | 65,651,570 | | $ | 6,565 | | $ | 454,327 | | $ | 2,562,822 | | $ | 69,211 | | 10,285,329 | | $ | (360,226) | | $ | 2,732,699 | | $ | 25,223 | | $ | 2,757,922 | |
See Notes to the Condensed Consolidated Financial Statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(All U.S. Dollar, Euro and British Pound Sterling amounts presented in thousands except share and per share data or except as otherwise specified)
1. Nature of Operations and Accounting Policies
Nature of Operations
THOR Industries, Inc. was founded in 1980 and is the sole owner of operating subsidiaries (collectively, the “Company” or “THOR”), that, combined, represent the world's largest manufacturer of recreational vehicles (“RVs”). The Company manufactures a wide variety of RVs in the United States and Europe and sells those vehicles, as well as related parts and accessories, primarily to independent, non-franchise dealers throughout the United States, Canada and Europe. Unless the context requires or indicates otherwise, all references to “THOR,” the “Company,” “we,” “our” and “us” refer to THOR Industries, Inc. and its subsidiaries.
The July 31, 2021 amounts are derived from the annual audited financial statements of THOR. The interim financial statements are unaudited. In the opinion of management, all adjustments (which consist of normal, recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented have been made. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2021. Due to seasonality within the recreational vehicle industry, and the impact of the ongoing supply chain disruptions on our industry, among other factors, annualizing the results of operations for the nine months ended April 30, 2022 would not necessarily be indicative of the results expected for the full fiscal year.
2. Acquisitions
Airxcel
On September 1, 2021, the Company acquired Wichita, Kansas-based AirX Intermediate, Inc. (“Airxcel”). Airxcel manufactures a comprehensive line of high-quality component products which are sold primarily to original equipment RV manufacturers as well as consumers via aftermarket sales through dealers and retailers. Airxcel provides industry-leading products in recreational vehicle heating, cooling, ventilation, cooking, window coverings, sidewalls and roofing materials, among others. The initial cash consideration for the Airxcel acquisition was $750,000 in cash, subject to adjustments, and was funded through a combination of cash-on-hand and $625,000 of borrowings from the Company's asset-based credit facility (“ABL”). The total cash consideration to be paid was subject to the final determination of the actual acquired net working capital as of the close of business on September 1, 2021, which was finalized in the second quarter of fiscal 2022 and the true-up reduced the cash consideration to $745,279, net of cash acquired. In conjunction with the Airxcel acquisition, the Company expanded its existing ABL facility from $750,000 to $1,000,000, favorably amended certain terms of the agreement and extended the term of the ABL as discussed in Note 12 to the Condensed Consolidated Financial Statements. The interest rate provisions remain unchanged.
The Company acquired Airxcel as part of its long-term, strategic growth plan and the acquisition is expected to provide numerous benefits, including strengthening the RV supply chain, diversifying its revenue sources and expanding Airxcel’s supply chain business in North America and Europe. Airxcel operates as an independent operation in the same manner as the Company's other subsidiaries.
The results of Airxcel are included in the Company’s Condensed Consolidated Statements of Income and Comprehensive Income since the September 1, 2021 acquisition date. Airxcel recorded net sales of $371,503, net of intercompany sales, and net income before income taxes, net of intercompany profit elimination, of $25,595 for the period from the date of acquisition through April 30, 2022. Net income before income taxes includes a charge of $6,791 related to the step-up in assigned value of acquired Airxcel inventory that was included in cost of products sold, and also includes $25,930 in amortization expense related to the acquired intangible assets.
From the acquisition date through April 30, 2022, the Company made immaterial measurement period adjustments to better reflect the facts and circumstances that existed at the acquisition date. The following table summarizes the estimated fair values of the Airxcel net assets acquired on the acquisition date. The Company is in the process of finalizing the fair value analysis, but this analysis has not been fully completed. The provisional amounts included below, related to deferred income tax liabilities and certain accrued expenses, remain subject to potential adjustment. The Company expects to finalize these values as soon as practical and no later than one year from the acquisition date.
| | | | | | | | |
Cash | | $ | 23,404 | |
Inventory | | 71,150 | |
Other assets | | 62,657 | |
Property, plant and equipment | | 40,518 | |
Amortizable intangible assets: | | |
Customer relationships | | 284,000 | |
Trademarks | | 56,900 | |
Design technology assets | | 60,600 | |
Backlog | | 700 | |
Goodwill | | 368,688 | |
Current liabilities | | (109,586) | |
Deferred income tax liabilities | | (79,115) | |
Other liabilities | | (10,494) | |
Non-controlling interest | | (739) | |
Total fair value of net assets acquired | | 768,683 | |
Less cash acquired | | (23,404) | |
Total cash consideration for acquisition, less cash acquired | | $ | 745,279 | |
On the acquisition date, amortizable intangible assets had a weighted-average useful life of 18.3 years. The customer relationships were valued based on the Discounted Cash Flow Method and are being amortized on an accelerated basis over 20 years. The trademarks were valued on the Relief from Royalty Method and are being amortized on a straight-line basis over 20 years. The design technology assets were valued on the Relief from Royalty Method and are being amortized on a straight-line basis over 10 years. Backlog was valued based on the Discounted Cash Flow Method and was amortized on a straight-line basis over two months. The majority of the goodwill recognized as a result of this transaction is not deductible for tax purposes.
Tiffin Group
On December 18, 2020, the Company acquired luxury motorized recreational vehicle manufacturer Tiffin Motorhomes, Inc., including fifth wheel towable recreational vehicle manufacturer Vanleigh RV, and certain other associated operating and supply companies, which primarily supply component parts and services to Tiffin Motorhomes, Inc. and Vanleigh RV (collectively, the “Tiffin Group”). Tiffin Group, LLC, a wholly-owned subsidiary of the Company, owns the Tiffin Group. Tiffin Motorhomes, Inc. operates out of various locations in Alabama while Vanleigh RV operates out of Mississippi.
The cash consideration for the acquisition of the Tiffin Group was $288,238, net of cash acquired, and was funded through existing cash-on-hand as well as $165,000 in borrowings from the Company’s existing asset-based credit facility.
The following table summarizes the final fair values of the Tiffin Group net assets acquired on the acquisition date.
| | | | | | | | |
Cash | | $ | 13,074 | |
Inventory | | 116,441 | |
Other assets | | 53,860 | |
Property, plant and equipment | | 48,262 | |
Amortizable intangible assets: | | |
Dealer network | | 92,200 | |
Trademarks | | 32,100 | |
Non-compete agreements | | 1,400 | |
Backlog | | 4,800 | |
Goodwill | | 65,064 | |
Current liabilities | | (81,423) | |
Deferred income tax liabilities | | (37,263) | |
Other liabilities | | (7,203) | |
Total fair value of net assets acquired | | 301,312 | |
Less cash acquired | | (13,074) | |
Total cash consideration for acquisition, less cash acquired | | $ | 288,238 | |
On the acquisition date, amortizable intangible assets had a weighted-average useful life of 18.8 years. The dealer network was valued based on the Discounted Cash Flow Method and is being amortized on an accelerated basis over 18 to 20 years. The trademarks were valued on the Relief from Royalty Method and are being amortized on a straight-line basis over 20 years. Backlogs were valued based on the Discounted Cash Flow Method and were amortized on a straight-line basis over five to seven months. Generally, the goodwill recognized as a result of this transaction is not deductible for tax purposes.
The following unaudited pro forma information represents the Company’s results of operations as if the fiscal 2022 acquisition of Airxcel had occurred at the beginning of fiscal 2021 and the fiscal 2021 acquisition of the Tiffin Group had occurred at the beginning of fiscal 2020. These pro forma results may not be indicative of the actual results that would have occurred under the ownership and management of the Company.
| | | | | | | | | | | | | | |
| | Three Months Ended April 30, |
| | 2022 | | 2021 |
Net sales | | $ | 4,657,517 | | | $ | 3,595,680 | |
Net income attributable to THOR Industries, Inc. | | $ | 348,051 | | | $ | 190,564 | |
Basic earnings per common share | | $ | 6.34 | | | $ | 3.44 | |
Diluted earnings per common share | | $ | 6.32 | | | $ | 3.42 | |
| | | | | | | | | | | | | | |
| | Nine Months Ended April 30, |
| | 2022 | | 2021 |
Net sales | | $ | 12,538,217 | | | $ | 9,352,649 | |
Net income attributable to THOR Industries, Inc. | | $ | 863,674 | | | $ | 457,147 | |
Basic earnings per common share | | $ | 15.62 | | | $ | 8.26 | |
Diluted earnings per common share | | $ | 15.56 | | | $ | 8.22 | |
Togo Group
As discussed in Note 2 to the Company’s Consolidated Financial Statements included in the Fiscal 2021 Form 10-K, the Company held a 73.5% ownership interest in the Togo Group, which was rebranded as Roadpass Digital in November 2021. During the third quarter of fiscal 2022, the Company acquired the remaining interest in Togo Group for $16,144 in cash, and as a result holds a 100% ownership interest in Togo Group as of April 30, 2022.
3. Business Segments
The Company has three reportable segments, all related to recreational vehicles: (1) North American Towables, (2) North American Motorized and (3) European. The operations of the Company’s Postle, Roadpass Digital (formerly Togo Group) and Airxcel subsidiaries are included in Other. Net sales included in Other related primarily to the sale of component parts and aluminum extrusions. Intercompany eliminations adjust for Postle and Airxcel sales primarily to the Company’s North American Towables and North American Motorized segments, which are consummated at established transfer prices generally consistent with the selling prices of products to third parties.
The following tables reflect certain financial information by reportable segment:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended April 30, | | Nine Months Ended April 30, |
NET SALES: | 2022 | | 2021 | | 2022 | | 2021 |
Recreational vehicles | | | | | | | |
North American Towables | $ | 2,640,137 | | $ | 1,726,102 | | $ | 6,866,059 | | $ | 4,491,327 |
North American Motorized | 1,053,045 | | 775,393 | | 2,954,879 | | 1,846,243 |
Total North America | 3,693,182 | | 2,501,495 | | 9,820,938 | | 6,337,570 |
European | 724,002 | | 894,240 | | 2,080,729 | | 2,230,191 |
Total recreational vehicles | 4,417,184 | | 3,395,735 | | 11,901,667 | | 8,567,761 |
Other | 383,170 | | 106,960 | | 935,146 | | 262,381 |
Intercompany eliminations | (142,837) | | (43,431) | | (346,054) | | (105,730) |
Total | $ | 4,657,517 | | $ | 3,459,264 | | $ | 12,490,759 | | $ | 8,724,412 |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended April 30, | | Nine Months Ended April 30, |
INCOME (LOSS) BEFORE INCOME TAXES: | 2022 | | 2021 | | 2022 | | 2021 |
| | | | | | | |
Recreational vehicles | | | | | | | |
North American Towables | $ | 326,697 | | $ | 167,693 | | $ | 868,874 | | $ | 456,752 |
North American Motorized | 116,293 | | 54,780 | | 309,228 | | 139,768 |
Total North America | 442,990 | | 222,473 | | |